How PSC snatched victory from defeat

Utility lobbyists got caught unawares on last day of Assembly

April 14, 2002|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

What a difference a day makes.

In the case of House Bill 135, it actually took less than a day - try 12 hours to be exact - for lawmakers to transform an unremarkable regulatory financing measure into a legislative coup.

With a hastily crafted amendment tacked on, HB135 won unanimous approval from the General Assembly in the last hour of the 90-day session.

The bill, if signed by the governor, effectively nullifies an appeals court ruling issued earlier last Monday morning and gives regulators broader authority to monitor utility service in the state.

It was a swift and bold move that blindsided a cadre of utility lobbyists and the companies they represent.

More importantly, it would keep the Maryland Public Service Commission from being forced to hold several chaotic months of hearings to reissue dozens of complicated rules that govern electricity deregulation.

"It would not have been easy," says Chairman Catherine I. Riley of the PSC, which regulates state utilities. "When the court ruling came out, I really thought it was too late for us to do anything."

"I was stunned when I heard what happened."

The run on the clock began Monday morning shortly after the state's highest court issued an opinion that overturned a PSC order limiting links between utilities and their unregulated affiliates - a victory for utilities in the 2-year-old case.

Susan Stevens Miller, the PSC general counsel, was walking in downtown Annapolis waiting to attend a conference committee hearing on HB135, a measure sponsored by several legislators to help ensure financing to the PSC and the People's Counsel, the consumers' advocate on utility matters.

About noon, Miller ran into a lawyer for Baltimore Gas and Electric Co. who told her about the Court of Appeals ruling.

`It sounded bad'

"It sounded bad," said Miller, who made her way over to State Circle where the law firm of Alexander & Cleaver throws an annual hot dog and hamburger barbecue on the last day of the legislative session.

Hundreds of attorneys, lobbyists and legislators would drop by the cookout that day, but by the time Miller arrived about 12:30 p.m., the first of the firm's namesakes was already a step ahead.

Gary Alexander, a former legislator and People's Counsel and now lobbyist, had grabbed Del. John Adams Hurson to introduce him to guests. Alexander had just been told about the court ruling, too.

"I told him [Hurson] what it meant, that the ruling was basically throwing out a four-year process and that the commission needed as much reasonable flexibility as possible to implement complicated decisions that are required for the electric industry," said Alexander, whose clients include companies that want to compete against the state's utilities.

"What the court did was just really shocking," Alexander said he told Hurson, chairman of the powerful House Environmental Matters Committee.

"They erased a decision-making process that created a set of rules that is a very important part of electric restructuring."

Those rules set up a code of conduct that attempted to create a level playing field for competing utilities.

In a June 2000 order, the PSC restricted utilities from sharing brand names, personnel and assets with their unregulated affiliates.

Under the order, affiliates would be forced to pay royalties to use a utility's logo or names. They also would be limited in sharing personnel and assets, and prohibited from joint promotions and marketing.

Utilities sue PSC

Fourteen utilities took the PSC to court immediately, complaining that the stringent rules gave unfair advantages to out-of-state competitors. Wicomico County Circuit Court disagreed. The utilities appealed.

On Monday, the state's highest court handed the utilities a victory by overturning the PSC order. Focusing on PSC procedure, the appeals court said the commission should not have used "generic proceedings" to issue an order that had "significant changes in policy."

Instead, the court said the commission should have held formal administrative proceedings with public notification, public response and legislative review to adopt regulations that affected all utilities - a process that can take as much as six months.

Hurson said he realized immediately that the ruling "had major implications for the work that had been done on electricity deregulation. ... All the work the PSC had done would have been put in jeopardy. This was a critical decision for us."

Hurson's committee and Sen. Thomas L. Bromwell's Senate Finance Committee oversee energy deregulation issues.

Ought `to fix this'

"We really ought to try and fix this," Alexander told him. "There's a utility trademark bill about to go into conference. Could we form an amendment to that?"

"Has any language been drafted on it yet?" Hurson asked.

"No," Alexander replied.

Then Miller walked by with a hot dog in hand.

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